The down payment is a percentage of the home’s purchase price you are required to pay prior to closing. Generally, down payments vary from mortgage to mortgage, and buyer to buyer. Home buyers will always have several options available when purchasing a property. It is crucial to stay informed about these options and what down payment percentages are required for each home loan product. A qualified loan officer will ask you questions based on your goals, needs and wants for the property to determine which product would suit you & your family the most.
Traditionally, homebuyers need to put down anywhere between 3-30 percent of the purchase price in order to qualify for financing. Typically, if you have good credit you could get into a nice house with as little as a 5% down payment and with decent rates. However, you will not avoid private mortgage insurance unless you look at a direction that has what’s called Lender Paid Mortgage Insurance. If you spend a larger amount on a down payment such as 20%, you will be paying on a smaller balance and therefore, will have lower monthly payments on the mortgage, avoid paying mortgage insurance, and obtain a lower interest rate. (more…)